Hester Peirce: Token Fundraising Is Coming To The USA (And CLARITY Makes It Real)

Transcript

what your priorities are for the remainder of the year. You know, of course, these two pieces, innovation exemption and 611, are are tremendous and I think certainly move us further in the right direction. Um but but what are your main priorities uh when it comes to the the crypto task force and ultimately great delivering greater regulatory clarity for digital assets? >> Well, so one one thing that I think will affect where the commission goes is whether clarity passes because as I said, clarity does give us quite a few regulatory obligation uh rule writing obligations. And so, that's something that we're watching and we're trying to prepare for um what that will look like if that if that

passes what how we'll go about um coordinating that work because that will be a big coordination job. That's one piece. The The next thing is we have talked um about the innovation exemption. That is one thing I'd like to see get done, but another thing that that I have talked about for a long time is the ability to use tokens in in fundraising and in raising capital. And so, what does that look like? And we we uh we have been doing some work on that. So so that's also a priority. Um and and then we are dealing with the nuts and bolts issues around transfer agents, interaction between transfer agents and and blockchain, um custody of crypto

assets both on the investment adviser side and on the broker-dealer side, clearing agencies, um what does that look like? We have we we the staff um green lighted the DTCC to do um to do some experimentation here, got a no action letter. So there are a lot of things like that. Um and then we're we're thinking longer term about definitions of things like brokers. We put the staff put out um a statement around user interfaces.

That's a temporary statement with the idea that the staff needed some time to think about how the broker-dealer regulation interacts with this with this area. So, I think that's something else that we're spending time thinking about. Um vaults are another issue that I think uh deserves some some attention from the from the agency and we're thinking about as well. Um and you know, urging people to come in and talk to us because there are some potential areas there where um activities could implicate the securities laws and people need to be careful there.

Um so, those are some of the the the thoughts. Now, I should say that my term ended last June. I can stay until the end of the year unless someone else gets put into this spot, but I will be leaving before that um time. And so, my time here is short and I I um am very enthusiastic that the commission will continue to do good work in this area. And and so, I will not be here for for most of that work. Now, I should say too, it's not just the SEC, it's the CFTC.

We're doing a lot of joint work with them. The CFTC has been very busy on many fronts. Um but one of the areas that we've been working with them on is is coordinating around where do products sit, where should they be regulated? Um what does it look like for an entity to trade uh or to make available to its customers products that may fit within the SEC's jurisdiction and the CFTC's jurisdiction. So, thinking about those kinds of issues will also be a big focus.

>> Certainly. And And this is part of the foundation that you lay for the following commissioners that that that come after Uh as well as the definitions and taxonomy that you talk about leaves not only a legacy but also clear rules of the road that will will serve as the interpretation for the the following regulators. And so you know we we talked about the Clarity Act and how the this is going to be sort of this you know lasting piece is going to affect things. There's also you know the innovation exemption and so in addition to the rules that we've talked about today I'm curious you know are there criteria or

processes that you've seen companies or or you know entities take now that you think are are you know the this is the way things should be done. You know what what in general can these entities take into account that will serve as the building blocks going into the future. For instance you know you mentioned the DTCC got this no action letter. Obviously they they are you know a very prominent entity in this entire industry. Is there any general criteria or processes that you would recommend as we move forward that you anticipate will become sustainable in the regulation moving forward?

>> I mean the biggest thing I would recommend is think about what what you're trying to do what you need to do to make that commercially viable and then what kind of regulatory relief you need but this is a very complicated legal area and and people really need to be thinking about do I need to come in and register this product? Do I need to ask for no action reliefs from something? Might I be pulled into the definition of of broker dealer investment adviser investment company.

Don't panic if that's the case. Come in and talk to us and we can think about what makes sense in terms of what what would it look like for you to register your product or what you know, are there any requirements that don't make sense because we have information on the blockchain that maybe replicates information that would otherwise be generated through a regulatory requirement. So, I think really best practices are get good I I hate to tell people that they have to go talk to to to lawyers, but go talk to a good lawyer who specializes in this area.

Um and then we we um really are are we the crypto task force, but more generally the staff at the SEC is very eager to engage. And I think we can make some good progress. It's only by people being willing to come in and say, "Hey, this is what I'm trying to do. Um I think we need some relief here." Um that we can move things forward.